Mortgage products vary in their requirements for down payment, qualifying ratios, loan-to-value ratios, credit reviews and cash reserves. Some of the best deals come with income restrictions (low and moderate income home buyers only.) To understand these products, it is helpful to divide them into two broad categories; conventional loans and government-guaranteed or insured programs.

The Conventional loans of years ago required a 20% down payment. These loans have now joined many other loan products which require as little as a three to five percent down payment, and they have more flexible underwriting criteria. This explosion of new loan products provides and increased opportunity for first time home buyers to move into homeownership. This increased flexibility and corresponding risk has occurred as a result of such factors as:

• Greater sophistication and automation in the mortgage lending industry

• Establishment of Community Reinvestment Act (CRA) requirements

• Increased competition for customers

• Availability of private and government sponsored mortgage insurance

• Existence and influence of the secondary market

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